BILL NUMBER: SB 1647	CHAPTERED  07/10/00

	CHAPTER   113
	FILED WITH SECRETARY OF STATE   JULY 10, 2000
	APPROVED BY GOVERNOR   JULY 7, 2000
	PASSED THE SENATE   JUNE 29, 2000
	PASSED THE ASSEMBLY   JUNE 22, 2000
	AMENDED IN ASSEMBLY   JUNE 15, 2000
	AMENDED IN ASSEMBLY   JUNE 14, 2000

INTRODUCED BY   Senator O'Connell
   (Coauthors:  Senators Alarcon, Chesbro, Costa, Karnette,
McPherson, Murray, Rainey, and Soto)
   (Coauthors:  Assembly Members Alquist, Calderon, Cardoza, Corbett,
Davis, Dutra, Gallegos, Hertzberg, Honda, Jackson, Longville,
Lowenthal, Machado, Mazzoni, Nakano, Romero, Scott, Shelley,
Steinberg, Strom-Martin, Thomson, Torlakson, Villaraigosa,
Washington, Wayne, Wiggins, and Wildman)

                        FEBRUARY 22, 2000

   An act to add Division 28 (commencing with Section 37000) to the
Public Resources Code, and to add Sections 17039.1, 17053.30,
23036.1, and 23630 to the Revenue and Taxation Code, relating to
conservation, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1647, O'Connell.   Conservation.
   (1) Existing law provides various programs for the conservation of
specified public resources.
   This bill would enact the Natural Heritage Preservation Tax Credit
Act of 2000, pursuant to which the Wildlife Conservation Board would
implement a program under which property, as defined, may be
contributed to the state, any local government, as defined, or to any
nonprofit organization designated by a local government, based on
specified criteria, in order to provide for the protection of
wildlife habitat, open space, and agricultural lands.
   (2) The Personal Income Tax Law and the Bank and Corporation Tax
Law authorize various credits against the taxes imposed by those
laws.
   This bill would authorize a credit against those taxes under the
Personal Income Tax Law and the Bank and Corporation Tax Law in an
amount equal to 55% of the fair market value of any qualified
contribution, as defined, contributed during the taxable or income
year pursuant to the Natural Preservation Tax Credit Act of 2000, as
provided.
   (3) This bill would also declare that it is to take effect
immediately as an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Division 28 (commencing with Section 37000) is added to
the Public Resources Code, to read:

      DIVISION 28.  NATURAL HERITAGE PRESERVATION TAX CREDIT ACT OF
2000
      CHAPTER 1.  INTENT

   37000.  This division shall be known and may be cited as the
"Natural Heritage Preservation Tax Credit Act of 2000."
   37001.  The Legislature finds and declares all of the following:
   (a) The continued economic development of California will be
fostered and improved if conflicts over the use of natural resources
can be resolved without litigation or disputes.
   (b) The economic development of California can be facilitated if
endangered species and other forms of plants, fish, and wildlife can
be protected quickly and efficiently, so that development and
agricultural use can proceed on other lands.
   (c) Water allocation decisions could be eased if water could be
provided for fish, wildlife, and aquatic and riparian habitat without
objection by other water users.
   (d) The intent of this division is to accommodate economic
development and resolve land use and water disputes in a manner
beneficial to all people in California, and to the benefit of
California environmental quality.
   (e) The further intent of this division is to foster partnerships
between the public and private sectors to resolve disputes and
promote economic growth and environmental quality.
   (f) Conservation easements protect land, keep land in private
ownership and on the tax rolls, and, where appropriate, are the
preferred method to protect agricultural and habitat values.
   (g) The value of wildlife habitat to the state is very high,
especially in the case of implementing habitat conservation plans and
multispecies conservation plans.
   (h) Habitat stewardship shall be assisted and rewarded, and it is
in the state's interest to encourage landowners to perceive habitat
as an asset rather than a liability.
   (i) It is the intent of the Legislature, in enacting this
division, to provide an additional tool for the protection of
wildlife habitat, open space, and agricultural lands.  However, there
continues to be a recognized need for additional funding sources for
park, wildlife, and recreation facilities, as well as for the
preservation of open space and agricultural lands.
   (j) It is the intent of the Legislature in enacting this division
to protect wildlife habitat, open space, and agricultural lands by
providing up to one hundred million dollars ($100,000,000) in tax
credits for donations of qualified land.

      CHAPTER 2.  DEFINITIONS

   37002.  As used in this division, the following terms have the
following meanings:
   (a) "Board" means the Wildlife Conservation Board created pursuant
to Article 2 (commencing with Section 1320) of Chapter 4 of Division
20 of the Fish and Game Code.
   (b) "Conservation easement" means a conservation easement, as
defined by Section 815.1 of the Civil Code, that is contributed in
perpetuity.
   (c) "Department" means any entity created by statute within the
Resources Agency.
   (d) "Designated nonprofit organization" means a nonprofit
organization qualified under Section 501(c)(3) of Title 26 of the
United States Code that has as a principal purpose the conservation
of land and water resources and that is designated by a local
government or a department to accept property pursuant to this
division in lieu of the local government or a department.  In order
to be eligible to receive a donation of property pursuant to this
division, a nonprofit organization shall have experience in land
conservation.
   (e) "Donee" means any of the following:
   (1) A department to which a donor has applied to donate qualified
property.
   (2) A local government that has filed a joint application with a
donor requesting approval of a donation of property to that local
government.
   (3) A designated nonprofit organization.
   (f) "Donor" means a property owner who donates, or submits an
application to donate, property pursuant to the program.
   (g) "Final approval" or "approval for acceptance" means the board'
s approval of the granting of a tax credit for a donation of
qualified property pursuant to the program.
   (h) "Local government" means any city, county, city and county,
special district, or any district, as defined in Section 5902 or in
Division 26 (commencing with Section 35100), or any joint powers
authority made up of those entities or those entities and state
agencies.
   (i) "Program" means the Natural Heritage Preservation Tax Credit
Program authorized by this division.
   (j) "Property" means any real property, and any perpetual interest
therein, including land, conservation easements, and land containing
water rights, as well as water rights.
   (k) "Secretary" means the Secretary of the Resources Agency.

      CHAPTER 3.  NATURAL HERITAGE PRESERVATION TAX CREDIT PROGRAM

   37005.  The Wildlife Conservation Board shall implement the
program.  The board may request staff services from any department
that submits an application to the board.
   37006.  (a) Under the program, upon approval by the board, a donor
may contribute his or her qualified property to a donee and receive
a tax credit for a portion of the value of the property, as provided
in Sections 17053.30 and 23630 of the Revenue and Taxation Code.
   (b) The board shall adopt guidelines or regulations to implement
the program, including procedures for applications submitted pursuant
to Chapter 4 (commencing with Section 37010) and for the evaluation
of properties proposed to be contributed pursuant to the program.
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code does not apply to the guidelines or
regulations adopted pursuant to this section.

      CHAPTER 4.  PROCEDURES

   37010.  Applications shall be submitted to the donee to which the
donor proposes to contribute the property.
   37011.  At a minimum, each application shall contain all of the
following:
   (a) The identification of the donor and donee.
   (b) A description of the property, including documentation of how
the property meets the criteria for qualified property.
   (c) A property appraisal meeting the requirements of Section 170
of Title 26 of the United States Code, setting forth the fair market
value of the property.
   (d) (1) A certification by the donor that the contribution
satisfies the requirements for a qualified contribution, pursuant to
Section 37015, and that the donor received no other valuable
consideration for the donation of property eligible for the tax
credit.
   (2) The donor shall also certify that the contribution was not,
and is not, required to satisfy a condition imposed upon the donor by
any lease, permit, license, certificate, or other entitlement for
use issued by one or more public agencies, including, but not limited
to, the mitigation of significant effects on the environment of a
project pursuant to an approved environmental impact report or
mitigated negative declaration required pursuant to the California
Environmental Quality Act (Division 13 (commencing with Section
21000)).
   (e) A certification by the donor that the application discloses
any known or suspected environmental conditions associated with the
property.
   37012.  (a) Each donee shall evaluate applications submitted to it
and prepare a plan for the board that sets forth the donee's
priorities for acquisition of qualified property under the program.
Consistent with the criteria established for the program, each donee
may use its own priority lists and procedures in determining which
properties or types of properties shall be given priority.
   (b) Each donee or the board may request that the applicant supply
further information reasonably necessary to allow the donee or the
board to evaluate the proposed donation.  The department may accept
contributions of money from any taxpayer to pay or reimburse the
costs of appraisal, escrow, title, and other transaction costs
associated with the contribution of any particular property or set of
properties, including any environmental assessments required by the
department, and the costs of preparing any necessary management plan
for the property or set of properties.
   (c) Prior to acquiring an easement or other interest in land
pursuant to this division, a public hearing shall be held by the
donee, if the donee is a public agency, or by the board if the donee
is a non-profit organization, in the local community.  Notice shall
be given by the donee to the county board of supervisors of the
affected county, adjacent landowners, affected water districts, local
municipalities, and other interested parties, as determined by the
donee or the board.
   (d) When submitting a donation of qualified property to the board
for final approval, the donee shall provide the board with the fair
market value of the property proposed for acceptance, based on
appraisals that have been reviewed and approved by the Department of
General Services.
   37013.  The board shall provide a list to the Joint Legislative
Budget Committee and the Franchise Tax Board, in the form and manner
agreed upon by the Franchise Tax Board, of the names, taxpayer
identification numbers, including taxpayer identification numbers of
each partner or shareholder, as applicable, a description of the
donated property, and the total amount of the tax credit approved for
each donation.
   37014.  Assets received by a donee pursuant to this division shall
not be deemed transfers pursuant to Chapter 9 (commencing with
Section 2780) of Division 3 of the Fish and Game Code.  Funds from
the Habitat Conservation Fund, the Environmental Enhancement and
Mitigation Program Fund created pursuant to Section 164.56 of the
Streets and Highways Code, the State Parks and Recreation Fund, and
the Wildlife Restoration Fund, may not be used to fund the tax credit
authorized pursuant to this division.

      CHAPTER 5.  CRITERIA FOR ACCEPTANCE OF PROPERTY

   37015.  The board shall approve only contributions of properties
that meet one or more of the following criteria:
   (a) The property will help meet the goals of a habitat
conservation plan, multispecies conservation plan, natural community
conservation plan, or any other similar plan subsequently authorized
by statute that is designed to benefit native species of plants and
animals and development, including, but not limited to, protecting
forests, old growth trees, or oak woodlands.  In proposing and
approving the acceptance of contributed property pursuant to this
subdivision, the recovery benefits for listed species, the habitat
value of the property, the value of the property as a wildlife
corridor, and similar habitat-related considerations shall be the
criteria on which the acceptance is based.
   (b) The property will provide corridors or reserves for native
plants and wildlife that will help improve the recovery possibilities
of listed species and increase the chances that the species will
recover sufficiently to be eligible to be removed from the list, or
will help avoid the listing of species pursuant to the California
Endangered Species Act (Chapter 1.5 (commencing with Section 2050) of
Division 3 of the Fish and Game Code) or the federal Endangered
Species Act (16 U.S.C. Sec. 1531 et seq.), or protect wetlands,
waterfowl habitat, or river or stream corridors, or promote the
biological viability of important California species.
   (c) The property interest is a perpetual conservation easement
over agricultural land, or is a permanent contribution of
agricultural land, that is threatened by development and is located
in an unincorporated area certified by the secretary to be zoned for
agricultural use by the county.  Property accepted pursuant to this
subdivision shall be accepted pursuant to the California Farmland
Conservancy Program Act established by Division 10.2 (commencing with
Section 10200), pursuant to the agricultural conservation program of
the Coastal Conservancy, or pursuant to the Bay Area Conservancy
Program established pursuant to Chapter 4.5 (commencing with Section
31160) of Division 21.
   (d) (1) The property interest is a water right, or land with an
associated water right, and the contribution of the property will
help improve the chances of recovery of a listed species, will reduce
the likelihood that any species of fish or other aquatic organism
will be listed pursuant to the California Endangered Species Act
(Chapter 1.5 (commencing with Section 2050) of Division 3 of the Fish
and Game Code)) or the federal Endangered Species Act (16 U.S.C.
Sec. 1531 et seq.), will improve the protection of listed species, or
will improve the viability and health of fish species of economic
importance to the state.  The agency or local government receiving
the water right, or land with an associated water right, shall ensure
that it shall retain title to the water right, and that the water
shall be used to fulfill the purposes for which the water right or
land associated with a water right is being accepted.
   (2) Any contribution of a water right that includes a change in
the point of diversion, place of use, or purpose of use may be made
only if the proposed change will not injure any legal user of the
water involved and is made in accordance with either Chapter 10
(commencing with Section 1700), or Chapter 10.5 (commencing with
Section 1725), of Part 2 of Division 2 of the Water Code.
   (e) The property will be used as a park or open space or will
augment public access to or enjoyment of existing regional, or local
park, beach, or open-space facilities, or will preserve
archaeological resources.
   37016.  (a) The board shall accept applications under the program
only upon a determination that:
   (1) (A) The donation of property satisfies the requirements for a
qualified contribution pursuant to Section 170 of Title 26 of the
United States Code.  If only a portion (either an undivided
fractional interest in the entire property or one or more discrete
parcels) of a proposed conveyance of property satisfies the
requirements of Section 170 of Title 26 of the United States Code, or
if the property is sold for less than fair market value, only that
portion, or the amount representing the difference between the amount
paid by the donee and the fair market value, shall be eligible for
the tax credit, to the extent permitted by Section 170(h) of Title 26
of the United States Code.  The board may segregate eligible and
ineligible interests in property contributed pursuant to this
division.  The donor shall receive no other valuable consideration
for the donation of property subject to the tax credit.
   (B) For purposes of this division, if the property accepted by the
board was donated to satisfy a condition imposed upon the donor by
any lease, permit, license, certificate, or other entitlement for use
issued by one or more public agencies, including, but not limited
to, the mitigation of significant effects on the environment of a
project pursuant to an approved environmental impact report or
mitigated negative declaration required pursuant to the California
Environmental Quality Act (Division 13 (commencing with Section
21000)), that property shall not qualify for the credit provided in
Section 17053.30 or 23630 of the Revenue and Taxation Code.
   (2) There has been no release or threatened release of a hazardous
material on the property, unless all of the following occur:
   (i) A final remedy in response to the release has been approved by
the Department of Toxic Substances Control pursuant to Chapter 6.5
(commencing with Section 25100) of, Chapter 6.8 (commencing with
Section 25300) of, or Chapter 6.85 (commencing with Section 25396)
of, Division 20 of the Health and Safety Code, or the appropriate
California regional water quality control board pursuant to Chapter
6.7 (commencing with Section 25280) of Division 20 of the Health and
Safety Code.
   (ii) The donor or donee have agreed to implement the final remedy
approved pursuant to clause (i).
   (iii) The donor or donee have agreed to fund and have made
adequate funding available to pay for the response action, as defined
by Section 25323.3 of the Health and Safety Code.
   (b) Notwithstanding paragraph (2) of subdivision (a), a donation
of property containing hazardous materials may be accepted under the
program without satisfying the requirements of paragraph (2) of
subdivision (a) if the department that is the donee determines, based
on written findings from the Department of Toxic Substances Control
and the California regional water quality control board with
jurisdiction over the property, that the hazardous materials present
will pose no substantial risk to human health or the environment and
no substantial risk of liability on the donee under the conditions
under which the property will be used.  The Department of Toxic
Substances Control and the California regional water quality control
board with jurisdiction over the property shall carry out their
normal due diligence when developing the written findings that will
be the basis for the department's or regional board's, whichever is
applicable, written determination regarding the presence and risk of
toxic materials on the property.  As used in this subdivision,
"hazardous materials" has the same meaning as contained in
subdivision (d) of Section 25260 of the Health and Safety Code.

      CHAPTER 6.  MISCELLANEOUS

   37020.  (a) Nothing in this division authorizes or increases the
authority of any state or local agency to use eminent domain to
acquire private property.
   (b) Nothing in this division diminishes existing land or water
rights held by easement holders in any property proposed for
donation.
   37021.  (a) If any property approved for acceptance pursuant to
this division is later transferred by the donee, either the use of
the property shall be restricted by deed to the conservation purposes
for which the property was contributed pursuant to the program or
the proceeds of the sale shall be used by the donee that accepted the
property to acquire land in California of equal or greater value and
comparable public resources values.  The land acquired shall meet
the criteria of Section 37015.  Nothing in this division prohibits
the transfer of donated property to a nonprofit organization that is
qualified to manage the property for the purposes intended by this
division, if the terms of this section are met.  Any local government
or nonprofit organization seeking to sell land pursuant to this
subdivision shall first obtain the approval of the board that is the
donee.
   (b) Other than as provided by subdivision (a), property accepted
pursuant to this division shall only be used for purposes consistent
with Section 37015.
   (c) (1) If any unauthorized use is made of the property after the
property is donated to a local government or nonprofit organization
pursuant to this program, the local government or nonprofit
organization shall pay to the state the greater of the following:
   (A) The fair market value of the property based on appraisals when
finally accepted by the board.
   (B) The fair market value of the property based on appraisals at
the time of and based on the unauthorized use of the property.
   (2) The department that is the donee may seek injunctive relief to
prevent the unauthorized use of the property, or may assume
ownership or management of the property to assure that it is used in
the manner originally authorized.
   (d) The board shall develop a process to monitor the uses of any
land that a local government or nonprofit organization receives
pursuant to this division in order to ensure those uses are in
conformance with the purposes for which the property is accepted.
   37022.  (a) No more than a total of one hundred million dollars
($100,000,000) in tax credits may be awarded pursuant to this
division.
   (b) Tax credits may be awarded pursuant to this division in the
fiscal years 2000-01, 2001-02, 2002-03, 2003-04, and 2004-05.  No tax
credits may be awarded subsequent to fiscal year 2004-05 without
further statutory authorization.
  SEC. 2.  Section 17039.1 is added to the Revenue and Taxation Code,
to read:
   17039.1.  Notwithstanding Section 17039 or any other provision in
this part to the contrary, the credit allowed by Section 17053.30
(relating to natural heritage) may reduce the tax imposed under
Section 17041 or 17048 plus the tax imposed under Section 17504
(relating to the separate tax lump-sum distributions) below the
tentative minimum tax, as defined by Section 17062, but only after
allowance of the credit allowed by Section 17063.
  SEC. 3.  Section 17053.30 is added to the Revenue and Taxation
Code, to read:
   17053.30.  (a) There shall be allowed as a credit against the "net
tax," as defined in Section 17039, an amount equal to 55 percent of
the fair market value of any qualified contribution made on or after
January 1, 2000, and prior to December 31, 2005, by the taxpayer
during the taxable year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.
   (b) For purposes of this section, "qualified contribution" means a
contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the Wildlife
Conservation Board pursuant to Division 28 (commencing with Section
37000) of the Public Resources Code.
   (c) In the case of any passthrough entity, the fair market value
of any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources Code shall
be passed through to the partners or shareholders of the passthrough
entity in accordance with their interest in the passthrough entity
as of the date of the qualified contribution.  For purposes of this
subdivision, the term "passthrough entity" means any partnership, S
corporation, or limited liability company treated as a partnership.
   (d) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and the succeeding seven years if necessary, until
the credit is exhausted.
   (e) This credit shall be in lieu of any other credit or deduction
which the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.

  SEC. 4.  Section 23036.1 is added to the Revenue and Taxation Code,
to read:
   23036.1.  Notwithstanding Section 23036 or any other provision in
this part to the contrary, the credit allowed by Section 23630
(relating to natural heritage) may reduce the "tax" below the
tentative minimum tax, as defined by paragraph (1) of subdivision (a)
of Section 23455, but only after allowance of the credit allowed by
Section 23453.
  SEC. 5.  Section 23630 is added to the Revenue and Taxation Code,
to read:
   23630.  (a) There shall be allowed as a credit against the "tax,"
as defined in Section 23036, an amount equal to 55 percent of the
fair market value of any qualified contribution made on or after
January 1, 2000, and prior to December 31, 2005, by the taxpayer
during the income year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.
   (b) For purposes of this section, "qualified contribution" means a
contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the Wildlife
Conservation Board pursuant to Division 28 (commencing with Section
37000) of the Public Resources Code.
   (c) In the case of any passthrough entity, the fair market value
of any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources Code shall
be passed through to the partners or shareholders of the passthrough
entity in accordance with their interest in the passthrough entity
as of the date of the qualified contribution.  For purposes of this
subdivision, the term "passthrough entity" means any partnership or S
corporation.
   (d) If the credit allowed by this section exceeds the "tax," the
excess may be carried over to reduce the "tax" in the following year,
and the succeeding seven years if necessary, until the credit is
exhausted.
   (e) This credit shall be in lieu of any other credit or deduction
that the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.

  SEC. 6.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to remedy critical shortages in open space and to
safeguard the state's natural habitats from further degradation, it
is necessary that this act take effect immediately.
